IAN McAULEY. Brexit, Trump and the Lucky Country 8 – Don’t wait for a “leader”: we need leadership.

Jan 9, 2017

We have many hard issues to confront but our present political elites are adept at avoiding them. It’s futile and dangerous to wait for a “leader” who will solve our problems. The task of leadership is one that falls on anyone who has voice.

Ron Heifetz whom we met in Part 2, stresses the work of leadership, which he defines as “a set of activities involving the mobilization of the resources of an organization or people to make progress on the difficult problems it faces”. It’s about leadership, not “leaders”.

His definition needs to be unpacked.

As a “set of activities” it is quite separate from a position. Indeed, he stresses that leadership can be exercised from any position. Authority, by contrast, is positional; one is generally appointed to a position of authority (a CEO, a military commission), elected (a prime minister) or acknowledged through recognition of expertise (the authority of a qualified surgeon or an expert witness in court).

People with positions of authority are often constrained by specific mandates, or by majoritarian votes. Note, for example, that in recent years it’s been far easier for retired politicians – Fraser, Keating, Hewson for example – to raise difficult issues than it has been for serving politicians. Heifetz points out that people in positions of formal authority – prime ministers, ministers, premiers – are often more constrained in exercising leadership than those with some distance from authority. The task of those in authority positions is often to keep the system running smoothly, while leadership is unsettling and disruptive. That’s why it’s often futile to demand that prime ministers or others in prominent authority positions take the initiative in exercising leadership.

He refers to “mobilization of resources”. It’s not about simple leader-follower models. My metaphor for such models is the locomotive pulling a set of powerless carriages. Rather, his notion is about the group or organization using its own resources, willingly and with informed judgement. A group moving in the same direction, and of its own volition.

It’s about “organizations or people”. The group can be large or small – a nation state or a family. The theory is general.

For all our effort we may do no more than “make progress” on our problems. We may not always “solve” them. And as we make progress our understanding of the problem may change. Leadership in a democracy is an ongoing process.

He refers to “difficult problems”. Heifetz’s background is as a psychoanalyst: he uses the term in a psychoanalytical sense. By the adjective “difficult” he is not referring to technical difficulty, but adaptive difficulty – particularly the difficulties of facing up to the need for change and letting go of some long-held and cherished beliefs.

The difficult problems we all need to confront right now are those represented by the Brexit and Trump votes, and more generally by the discontent of those who have not shared in the benefits of economic growth.

In brief, the economic and political model that served the “developed” world so well in the 1945 to 1980 period, and that has since morphed into neoliberalism, has failed too many people. While it may still have some time to run in “developing countries”, in countries like the US and Australia it is not sustainable in its present form. Nor can it deal with the emerging problem of widening technological unemployment.

That’s a hard reality to confront, and various groups of the economic and policy elites have adopted their own forms of avoiding it.

How we avoid hard issues

Heifetz has coined the term “work avoidance” to refer to the mechanisms people use to avoid confronting hard issues.

In Australia the Coalition Government has re-asserted the economic orthodoxy of neoliberalism – “small government”, tax-cuts for businesses, some union bashing – even though these are almost diametrically the opposite of a set of policies that would ensure economic growth.

They have resorted to the classic work-avoidance technique of blaming others. Among enemies of the state they have identified are asylum-seekers threatening to open our borders and wreck our way of life, scientists who want us to pay crippling electricity bills and stop us supplying coal to a needy world, and course “leaners” – all would be well if only they got a job. And of course there is the perennial practice of blaming it all on the opposition, particularly when the government lacks a Senate majority.

Politicians in most parties have been calling for some measures to shield local industry from import competition. That’s a supposedly easy solution and a retreat to the past. If a government could re-erect a tariff wall it may work for a little while, but it’s really a way of staving off the inevitable. At the other end of the economic spectrum are those who say everything should be left to the market – in other words do nothing and avoid the hard reality that many of the markets we have fostered have failed.

A common frm of work-avoidance is to invoke tradition as a reason for inaction. We supposedly cannot address important issues such as balancing the budget, dealing with climate change, reforming school education or making our tax system fairer, because our two-party parliamentary system makes for gridlock. But there is nothing in our Constitution that says we are locked into these arrangements. As Ian Marsh points out, there is no reason we cannot operate as a multi-party democracy – as is the case in Germany where the Social Democrats and the Christian Democrats operate as a coalition. Marsh points out that we already have a multi-party democracy, but we adhere to unnecessary traditions and assumptions to ignore its existence.

The established business lobbies by and large have hardly moved from their nineteenth century model of a wealth-creating private sector in conflict with the “anti-enterprise brigade”; they have not come fully to grips with the twentieth century model of capitalism, let alone the twenty-first one. By and large they represent those who, through capturing rent or securing other government privileges, have done well and are inherently conservative.

Lobbyists and government have a mutually-reinforcing means of work-avoidance. Lobbyists seek to obstruct reforms, and governments find it easy to blame lobbyists for that obstruction. The subtle message to the public is “we would have liked to introduce a resource rent tax/reform poker-machine gambling/improved the Murray’s environmental flows, but the lobby groups would have slaughtered us”.

The left, for the most part, is putting much of its energy into issues to do with LGBTI rights and language (particularly 18C of the Racial Discrimination Act and politically correct language). A conspiracy theorist would suggest that the right is keeping these issues alive to deflect the left’s energy from economic matters. Some on the left, like crazed prophets warning of the end of the world, are pronouncing that capitalism is dead, but are not offering any plausible economic model to replace it.

The well-off – those Australians in the upper third of the income and wealth distribution – seem to believe that structural change is something that happens to other people. They fail to understand that they are included in the world’s most materially privileged one percent, and that the task of restoring public revenue through higher taxes should fall to them. (Of course the very rich should pull their weight, but there aren’t enough of them to restore our public revenue to health.)

A theme common to all these elites is that they say they need to explain themselves better. Whenever the Coalition does badly in an election – and they have done badly in the last six elections – their reaction is to sheet some of the blame to their failure to get their message across. The other reaction, a bipartisan one, has been is to blame the “leader”. Since 2000 Beazley, Crean, Latham, Rudd, Gillard, Nelson, Turnbull and Abbott have all served their parties as scapegoats. It’s much easier for an organization to find and punish a “leader” than to deal with its own, often systemic, shortcomings.

Business lobbies too are claiming that the public doesn’t understand them. They’re like corporations which, in response to falling sales, redouble their expenditure on promotion, but never bother going out to find why people aren’t buying their product. Shouting one’s message even louder without listening is a classic form of work avoidance.

These are all ways of avoiding the hard issues we face. On top of the perennial issues of public policy – marshalling resources for education, health care, defence and other ongoing public services – the problems we now face will involve a great deal of painful change.

The work of leadership

It’s not my intention to lay out a policy prescription. Good public policy is what emerges from a process of adaptive work. But in broad terms the most pressing problem in “developed” countries is the need to craft an economic and political framework that ensures the benefits of social and ecologically sustainable economic activity are distributed fairly. Within that framework there have to be ways to deal with climate change and technological unemployment, both pressing issues.

That framework will probably involve more restraints on markets, a stronger social wage, and a stronger role for public enterprise. It will probably involve more subsidiarity – a shifting of decision-making as far down the line to the local level as is practical.

Whatever framework develops it will have to ensure that people can develop their capabilities and contribute to their potential. A sine qua non for any economic system is to ensure that there is a connection between contribution and reward, a connection that’s been severed over the last thirty years. (Where the right sees “dole bludgers” and “leaners” the left sees rent seekers, overpaid executives and tax evaders: but both are seeing different aspects of a failing system.) And in a world of change there have to be safety nets that sustain not only people’s material standards but also their dignity and meaningful social involvement.

In Australia’s case, while we share some of the world’s most pressing problems, we have adaptive challenges of our own. We have squandered the proceeds of the mining boom on tax cuts and depletion of public assets, and aren’t ready to face the challenge of lower economic growth. Nor have we accepted that the economic model that kept us going for 200 years – depletion of non-renewable resources and reliance on foreign investment to prop up our exchange rate and to allow us to live beyond our means – is unsustainable. Donald Horne tried to warn us many years ago: that was leadership but we didn’t want to listen to him.

None of our political elites are game to point out that the days of plenty are behind us, and that the foreseeable future has to be one of sacrifice – shared sacrifice if we have any hope of holding our society together.

The path to such a changed framework will involve disruption and pain. The work of leadership is to manage and pace that process. Too fast, and there’s reaction and a retreat to populism. Too slow and there’s a steady decline, of the type Ian McLean describes in his work Why Australia Prospered, that saw South American countries 120 years ago slowly sink from prosperity into poverty. Either way the destination is dismally similar.

Those who exercise leadership will do so by bringing the hard issues to the fore, making sure that the community understands the issues to be dealt with and helping people take on new perspectives. One perspective in particular is to re-perceive tax as an investment and as payment for shared services rather than as a “burden”.

Effective leadership will ensure that people know what they must accept as immutable conditions (for example the need to reduce carbon emissions) and what they can influence themselves through individual or collective effort (for example restoring dilapidated infrastructure). Along the way, if such a process is managed well, trust in government and public institutions may be restored.

Again, I stress “leadership”, and not “leaders”. The “leader” who stands on his soapboax and says he can solve all our problems is either an idiot or a charlatan – perhaps both. We are naive if we think the task of adaptive change can be left to the “leader” – our Italianesque practice of throwing out prime ministers every couple of years reveals a collective immaturity.

Everyone who’s concerned with our situation can exercise leadership through raising the hard issues we confront in their own groups and helping people deal with them in their own ways.

Otherwise, in the absence of leadership, it’s over to populists.

Ian McAuley describes his work as “helping the left to engage with economics”.  He is an adjunct lecturer in public finance at the University of Canberra. Before taking an academic appointment he worked in the Commonwealth Government in trade and industry departments, in Australia and overseas.  And before that he was an engineer in a large manufacturing firm – back when Australia had a thriving manufacturing sector employing engineers.  He has qualifications from Adelaide and Harvard Universities.

Comment on Ian McAuley Series by John Menadue

The events that are unfolding tell me that in Australia, we still need a strong social democratic party. The issues are now just as pressing as they were in 1891 when the Australian Labor Party was formed to protect the rights of workers . In Australia today, the disadvantaged are no longer organised and represented by trade unions. Some find an outlet for their frustration in voting for One Nation.

Historically the Communist Party was a ginger group forcing the ALP to consider radical ideas. That situation has now changed. The Greens are attracting radical voters that in other days would have been natural ALP supporters. On the left the Greens are stealing the ALP’s lunch.

Given the dramatic changes in the structure of employment and the decline in trade union membership, the ALP needs to review its structure and organization. Its structure does not reflect its voter constituency. Control is in the hands of union blocs and factions with a large part of its voter constituency ignored. The ALP must retain strong links with the trade union movement, but unions have disproportionate power.

The ALP is not a national party but a confederation of state parties. Very little has changed in that regard in over 100 years.

The ALP needs to establish the Hawke/Keating/Button type leadership approach to handling our necessary and painful adjustments. The community must be trusted to participate in a genuine debate.

In this, shared sacrifice, is essential. We need to increase taxes and in ways that minimize tax avoidance.

Conservatives are driven by the ideology of ‘small government’. We need to reestablish the importance of the ‘mixed economy’ not to replicate the specifics of the 1950s and 1960s but to replicate such principles as freedom, quality, solidarity and subsidiarity.

We need to restore the concept of the social wage to help address market failure, particularly in education, health and housing.

Our members of parliament are not trusted and conservatives are happy with that outcome. But an effective role for governments and parliaments is essential for social democratic parties. So much of political discussion is highly partisan. We should consider building and resourcing Senate committees to sort out and discuss contentious public issues and come to a consensus or agreement that can then be considered by the highly partisan House of Representatives.

Our relationship with the US continues to be risky. The US is a ‘dangerous ally’ as Malcolm Fraser put it. That relationship needs serious review. At the same time we need to develop and improve our relationships in our own region particularly in such issues as climate change, global poverty, trade ,security and protecting human rights.

There are warning signs in Brexit and Trump that we must heed.  John Menadue

(Comments are welcome – see ‘comments box’ below.)

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